Home›Reverse Mortgages›Dave Ramsey fact check

A fact check, with the rules cited

Dave Ramsey and reverse mortgages: a claim-by-claim fact checkDave Ramsey calls reverse mortgages a rip-off. I checked his claims against the rules.

Ramsey’s advice is built for people who still have time to save. Many California homeowners in their 70s and 80s don’t. Below is each claim from Ramsey Solutions’ reverse mortgage article with a verdict and the federal rule or published research behind it, then what retirement researchers say about Ramsey’s own retirement math.

Ramsey’s pages checked October 6, 2026. I’m a reverse mortgage broker, so I have an interest in this question. That’s why every verdict cites something you can check yourself.

The short version

The short version: three of Ramsey’s reverse mortgage claims are false under current federal rules: that non-recourse protection is “a complete lie,” that a higher-value home can’t qualify, and that you “sell off your equity.” Four more leave out facts that change the answer, including what your heirs actually face. He’s right that costs are real and that a reverse mortgage isn’t for everyone. And on retirement income, the researchers who study it for a living have rejected his advice publicly, by name, with data.

The scorecard

Ten Ramsey claims, checked

Every quote is copied from Ramsey Solutions’ own pages, linked, as they read on October 6, 2026. Each one gets a red X and one of four labels.

False: Wrong under current federal law or HUD rules.
Misleading: Contains some truth but leaves out facts that change the answer.
Outdated: Closer to true before HUD changed the rules.
Opinion: A judgment, not a checkable fact. Here’s why I disagree.

10 claims checked: 3 false4 misleading1 outdated2 opinion

Dave Ramsey’s reverse mortgage claims, the verdict on each, and the facts
Ramsey says	Verdict	The facts
Ramsey quotes the industry’s promise You will never owe more than your home is worth! and answers: That is a complete lie.“What Is a Reverse Mortgage?”, updated March 17, 2025. His elder fraud page adds that loved ones could also end up owing more on their home than it’s worth.	Verdict: False	It’s federal law. Every FHA-insured reverse mortgage is non-recourse: when the loan is repaid, neither you nor your heirs owe more than the home is worth, and FHA insurance covers any shortfall. The balance can grow past the home’s value on paper. The bill can’t.Source: 24 CFR Part 206 (§206.125)
They won’t let you qualify if your home is worth more than a certain amount.“What Is a Reverse Mortgage?”, updated March 17, 2025.	Verdict: False	Home value doesn’t disqualify anyone. HUD caps the value used to calculate the loan, $1,249,125 for 2026, so a $3 million home can still qualify, with its loan figured on that amount. Owners of higher-value homes can also look at a proprietary jumbo reverse mortgage, which is not FHA-insured.Source: HUD Mortgagee Letter 2025-22
With this type of mortgage, you sell off your equity—the part you own—for cash.“Types of Mortgage Loans”, Ramsey Solutions.	Verdict: False	Nothing is sold. A reverse mortgage is a loan secured by your home. You keep the title, you keep living there as long as you meet the loan terms, and any equity left when the loan is repaid belongs to you or your heirs.Source: 24 CFR Part 206; HUD
Your family will have two options: Pay back the entire amount you owe, or give up your home to the bank.“What Is a Reverse Mortgage?”, updated March 17, 2025.	Verdict: Misleading	Heirs have more choices, and more protection, than that. They can sell the home and keep whatever equity is left; keep it by paying off or refinancing the loan for the lesser of the balance or 95% of the appraised value; or hand over the keys and owe nothing more. They get 30 days to respond and up to six months to sell or refinance, and the servicer can grant up to two 90-day extensions. More in the guide for adult children.Source: 24 CFR §206.125; HUD Handbook 4000.1
a hefty mortgage insurance premium that protects the lender (not you)“What Is a Reverse Mortgage?”, updated March 17, 2025.	Verdict: Misleading	The FHA premium (2% of the home value up front, up to the FHA limit, plus 0.5% a year on the balance) pays for the guarantee that makes the loan non-recourse for you and your heirs, and it backs your access to unused funds if a lender fails. It protects the lender and you.Source: HUD Mortgagee Letter 2017-12; 24 CFR Part 206
Here’s a spoiler: You’ll lose your home. Plain and simple.“What Is a Reverse Mortgage?”, updated March 17, 2025.	Verdict: Misleading	Any homeowner, mortgage or not, can lose a home over unpaid property taxes. A reverse mortgage removes the required monthly mortgage payment, and since 2015 HUD has required a financial assessment before closing and, where needed, a set-aside from the loan to pay property taxes and insurance. You still have to keep up taxes, insurance and maintenance. The loan comes due after 12 straight months in a care facility, and an eligible non-borrowing spouse can stay in the home.Source: 24 CFR §206.37 and §206.205 (HUD final rule, January 19, 2017); HUD Mortgagee Letters 2014-07 and 2021-11
a bunch of ridiculous fees … close to $10,000“What Is a Reverse Mortgage?”, updated March 17, 2025.	Verdict: Misleading	Costs are real, and on many California homes they run higher than his figure, because the FHA premium alone is 2% of the home value, up to the FHA limit. What he leaves out: HUD caps the origination fee, most costs are paid from the loan rather than out of pocket, and his alternative, selling the house, usually costs more. See the comparison below.Source: 24 CFR §206.31; HUD Mortgagee Letter 2017-12
Reverse mortgages are major rip-offs. … nothing more than a predatory program designed to take advantage of you“What Is a Reverse Mortgage?”, updated March 17, 2025.	Verdict: Opinion	That’s a judgment, so here’s why I disagree. Congress created this program, FHA insures it, HUD caps the origination fee, and no one can apply before meeting with an independent HUD-approved counselor. Nor is it being pushed on anyone: 24,182 FHA reverse mortgages were made nationwide in fiscal 2026, against $14.92 trillion in home equity held by Americans 62 and older. Even Ramsey’s article concedes most lenders are legit.Source: HUD data via HECMWorld, October 2, 2026; NRMLA/RiskSpan, first quarter 2026
Using a reverse mortgage to pay off a regular mortgage is just nuts!“What Is a Reverse Mortgage?”, updated March 17, 2025.	Verdict: Opinion	For a retiree on a fixed income, trading a required monthly mortgage payment for no required payment is often what keeps them in the house. HUD’s rules build this use in: paying off the existing mortgage is a “mandatory obligation” the loan covers at closing. Property taxes, insurance and upkeep still have to be paid.Source: 24 CFR §206.25
Earlier Ramsey material: Over 100,000 reverse mortgages have failed, resulting in foreclosures and evictions.As quoted by Movement Mortgage, February 28, 2024, and by Fairway’s Harlan Accola on Nasdaq, August 30, 2021.	Verdict: Outdated	That figure dates from the years after the 2008 housing crash. Reverse mortgage educator Dan Hultquist and Harlan Accola both point out that these were not failures of the product: many were routine payoffs after a borrower died or moved, and many of the rest were property-tax and insurance defaults, the exact problem HUD’s 2015 financial assessment and set-aside rules were written to prevent.Source: Movement Mortgage; Nasdaq; 24 CFR §206.205

The retirement his plan skips

You can’t go back to 1985 and save more

Ramsey’s plan of budgeting, saving and paying off the house works when you have decades. For a couple in their 80s whose problem is this month’s bills, “you should have saved more” is true and no help at all. Here’s the retirement many people actually face:

15.4%

of Americans 65 and older were in poverty in 2025 under the Census Bureau’s Supplemental Poverty Measure, up from 9.4% in 2020.

Census Bureau, September 15, 2026; AARP Foundation

46%

of retirees stopped working earlier than they planned. Health problems were the most common reason.

EBRI/Greenwald Retirement Confidence Survey, 2026

29.1%

average rate increase for California FAIR Plan homeowners, effective October 15, 2026.

California Department of Insurance, via KQED

$14.92 trillion

in home equity held by Americans 62 and older, a record.

NRMLA/RiskSpan, first quarter 2026

For many of them, the paid-off house Ramsey told them to build is now their largest asset. His answer for using it is to sell it. A reverse mortgage is a way to use it without moving out.

The real costs

The cost question, honestly

Ramsey is right that a reverse mortgage costs money. The fair question is: compared to what? His recommended alternative is to sell the house and downsize.

A reverse mortgage compared with selling and moving
Item	Reverse mortgage (HECM)	Selling and moving (Ramsey’s alternative)
Upfront costs	FHA premium of 2% of the home value (up to the FHA limit), a HUD-capped origination fee, and third-party closing costs	Agent commissions averaged 5.46% of the price nationally in August 2026, plus escrow, transfer taxes, repairs and concessions
How they’re paid	Mostly from the loan, not out of pocket	From the sale proceeds
Moving	None. You stay	Movers, plus the next home’s costs or rent
Your home	You keep the title	Sold
Taxes on the house	Borrowing is not a sale	A sale can trigger capital gains tax above the $250,000 / $500,000 exclusion. Ask your tax advisor
Afterward	No required monthly mortgage payment; property taxes, insurance, HOA dues and upkeep continue	Depends on the next home or rent

Ramsey’s own downsizing math leaves out the agent

His article describes selling a $350,000 home with $250,000 in equity, buying a $225,000 home for cash, and having $25,000 left over. At the August 2026 national average commission of 5.46%, the agents alone would take about $19,000 of that, before escrow, repairs, a mover, or the new home’s closing costs.

To be fair to Ramsey: if your heirs sell the house later, they’ll pay a commission then. The difference is that you got to stay home in the meantime. For every cost category, line by line, see what a reverse mortgage costs.

Credit where it’s due

Where Ramsey has a point

Costs are real

Upfront costs on a California home can exceed his estimate. Any honest broker should show you every line, in writing, before you decide.

It isn’t for everyone

If you’re debt-free and your income comfortably covers your life, you may not need one. Ramsey and I agree on that.

Bad actors exist

Check anyone you talk to on NMLS Consumer Access and with the California Department of Real Estate, and walk away from anyone who pushes you to put loan money into an annuity or an investment.

His debt advice works for many people

Even Michael Kitces, who documents Ramsey’s math errors, credits the debt snowball with “real-world/behavioral wisdom,” and a 2012 Northwestern University study (Gal and McShane, Journal of Marketing Research) found people who paid off small debts first were more likely to clear all of their debt.

A paid-off home is a fine goal. But a paid-off home doesn’t pay the electric bill, and a reverse mortgage is one of the few ways to use the equity Ramsey told you to build without moving out.

Ramsey vs. the researchers

On retirement income, the experts say Ramsey is the risky one

In November 2023, Ramsey told his audience that withdrawing 8% a year from an all-stock portfolio is safe, based on an assumed 12% average return. The researchers who study retirement income for a living answered by name, with data. For context, Bill Bengen, who created the 4% rule, puts the worst-case safe rate at 4.7% in his 2025 book A Richer Retirement, and Morningstar’s December 2025 research puts a safe starting rate at 3.9%.

“An 8% withdrawal rate in retirement, as recommended by Dave Ramsey, will almost guarantee that you run out of money.”

Karsten Jeske, PhD, CFAEarly Retirement Now
November 12, 2023

“I think that eight percent, though, is just a step too far.”

Wade Pfau, PhD, CFA, RICP®The American College of Financial Services, on the Rational Reminder podcast
January 25, 2024

“There is such a thing as a sequence of returns. That you don’t get 12% return per year on stocks.”

Michael Finke, PhD, CFP®The American College of Financial Services, on the Rational Reminder podcast
January 25, 2024

What Ramsey said back

Called his critics goober supernerds. (as reported by The American College of Financial Services, March 18, 2024)
Said settling for 4% is stupid and that its advocates are morons. (as reported by Morningstar)
stupid people put out low withdrawal rates (transcribed by PortfolioCharts, November 10, 2023)
Called the 4% rule hope stealing. (as reported by 24/7 Wall St., July 2, 2026)

The critics quoted here

PhD economists, Chartered Financial Analysts and Certified Financial Planner professionals, including a distinguished chair at The American College of Financial Services and the leaders of national advisory firms.

CFP® means Certified Financial Planner professional; CFA means Chartered Financial Analyst; RICP® means Retirement Income Certified Professional.

Dave Ramsey

A bachelor’s degree in finance and real estate from the University of Tennessee, 1982. His public biography lists no professional financial designation, and his company describes itself, in disclosures its SmartVestor advisors publish, as “a paid, non-client promoter of SmartVestor Pros” that “is not an investment advisor.”

Ramsey’s 8% advice isn’t about reverse mortgages. It matters here because it’s the same voice telling retirees which tools are too risky to use.

What the research says

Researchers stopped calling it a last resort more than a decade ago

The same research community that rejects Ramsey’s 8% rule has studied reverse mortgages for years. Much of that work points the opposite way from Ramsey: set up early and used with a plan, a reverse mortgage line of credit can help retirement savings last longer.

“Conventional wisdom hurts retirement sustainability: HECM shouldn’t be last resort”
Wade Pfau, PhD, CFA, RICP®, presentation to the National Reverse Mortgage Lenders Association, 2015
“Approximately nine years ago, ‘the conventional wisdom’ was reversed by two papers published in this Journal.”
Barry H. Sacks, J.D., Ph.D., Journal of Financial Planning, Financial Planning Association. Sacks also recounts that in 2013 the Financial Industry Regulatory Authority (FINRA) removed language from an investor alert saying a reverse mortgage should be used only as a last resort.

The research behind it

Sacks and Sacks, “Reversing the Conventional Wisdom: Using Home Equity to Supplement Retirement Income,” Journal of Financial Planning, February 2012.
Salter, Pfeiffer and Evensky, “Standby Reverse Mortgages: A Risk Management Tool for Retirement Distributions,” Journal of Financial Planning, August 2012.
Pfeiffer, Salter and Evensky, “Increasing the Sustainable Withdrawal Rate Using the Standby Reverse Mortgage,” Journal of Financial Planning, 2013.
Pfeiffer, Schaal and Salter, “HECM Reverse Mortgages: Now or Last Resort?” Journal of Financial Planning, 2014.
Moulton and others, “Reverse Mortgage Motivations and Outcomes”, HUD Cityscape, 2017.

Not every respected voice is a fan, and you should hear the cautions too. The Consumer Financial Protection Bureau warned in 2017 that using a reverse mortgage to delay Social Security often costs more than it gains, and the National Consumer Law Center has documented servicing problems. Those are reasons to get independent counseling and a careful plan. They aren’t reasons to rule the product out for everyone.

Follow the referrals

Ramsey’s advice comes with a referral network

Ramsey’s reverse mortgage article doesn’t just warn you away. As of October 6, 2026, it also carries an ad for Ramsey’s own mortgage referral service and a pitch for its SmartVestor investment-advisor program, and it recommends selling your house through a RamseyTrusted real estate agent.

SmartVestor advisors pay to be listed

One participating firm’s required disclosure lists “a flat monthly membership fee of $400 and a flat monthly territory fee of $700” and calls the arrangement “a material conflict of interest” (Compass Financial Group). Another firm’s disclosure says its advisors “pay SmartVestor cash compensation for these referrals” (Advantage Investment Services).

RamseyTrusted agents share their commissions

Ramsey’s help center says the service is free to you and that agents “earn a commission.” Independent reviews by Clever Real Estate, SmartAsset and RealEstateWitch report that agents pay Ramsey Solutions an upfront fee, monthly fees and a share of each closed commission. When the advice to a house-rich retiree is “sell the house,” you can weigh that for yourself.

One endorsement is in court

In Patrick v. Ramsey (U.S. District Court, Western District of Washington, No. 2:23-cv-00630-JLR), 17 of his listeners allege Ramsey was paid more than $30 million from 2015 to 2021 to promote a timeshare-exit company that, they say, did not deliver what it promised. They seek more than $150 million. In November 2025 the Ninth Circuit Court of Appeals upheld the denial of Ramsey’s request to move the case to arbitration, and a January 2026 schedule sets class-certification motions for March 2027.

These are allegations. No court has decided whether they are true. Sources: CBS MoneyWatch; Open Class Actions, June 29, 2026.

An honest answer

Is a reverse mortgage right for you?

Often a good fit

Homeowners 62 and older who want to stay put and are struggling with a mortgage payment or rising costs.
Retirees who need money for in-home care, medical bills or repairs.
A widow or widower who lost a Social Security check but not the bills.
Buyers 62 and older who want to downsize without a new mortgage payment, using a HECM for Purchase.
Financially secure retirees who, with their own financial and tax advisors, want a standby line of credit.

Probably not a fit

Anyone planning to move within a few years.
Anyone who can’t keep up with property taxes, insurance and upkeep.
Families where someone not on the loan must keep living in the home and can’t buy or refinance it.
Retirees whose income and savings already cover their lives comfortably.

I’ve worked with financially secure clients who used a reverse mortgage to supplement their retirement income as part of a plan built with their own advisors. Loan proceeds may be used for any lawful purpose. I don’t sell investments, annuities or insurance, and I don’t give investment or tax advice.

Every FHA-insured reverse mortgage starts with a meeting with an independent HUD-approved counselor, and in California seven days must pass after counseling before the application is final. You must live in the home, pay property taxes, homeowner’s insurance and any HOA dues, and maintain the home; if you don’t, the loan can become due. See who qualifies or run the reverse mortgage calculator.

Straight answers

Questions people ask about Dave Ramsey and reverse mortgages

Why does Dave Ramsey oppose reverse mortgages?

His whole system treats debt as the enemy, and a reverse mortgage is a loan. His company doesn’t take the category as an advertiser either: Ramsey’s published guidelines for radio affiliates list Reverse Mortgage among the categories to stay away from. His article recommends selling the house through his RamseyTrusted agent network instead.

Can you owe more than your home is worth with a reverse mortgage?

The balance can grow past the home’s value, but on an FHA-insured reverse mortgage neither you nor your heirs will be billed for the difference. That’s the non-recourse rule in 24 CFR Part 206, and FHA insurance pays the gap. Proprietary jumbo loans set their own terms in the loan documents.

What happens to a reverse mortgage when the owner dies?

The loan comes due. Heirs can sell and keep any equity left, keep the home by paying off or refinancing for the lesser of the balance or 95% of the appraised value, or hand over the keys and owe nothing more. They have 30 days to respond and up to six months to sell or refinance, with up to two 90-day extensions. The guide for adult children walks through it.

Is there a home value limit for a reverse mortgage?

Not for qualifying. For 2026 HUD caps the value used to calculate an FHA-insured reverse mortgage at $1,249,125; a more expensive home still qualifies, with its loan figured on that amount. A proprietary jumbo reverse mortgage can go higher.

Is Dave Ramsey a licensed financial advisor or a Certified Financial Planner?

His public biography lists a bachelor’s degree in finance and real estate from the University of Tennessee and no professional financial designation, and his company says in its SmartVestor disclosures that it is not an investment advisor. You can look anyone up with the CFP Board’s verification tool and FINRA BrokerCheck.

Is Dave Ramsey’s 8% withdrawal rule safe?

The research says no. The Money Guy Show’s testing put an inflation-adjusted 8% withdrawal at roughly a 25% to 45% chance of lasting 30 years, and Karsten Jeske’s simulations found failure rates of about 56% to 61%. Bill Bengen, who created the 4% rule, puts the worst-case safe rate at 4.7% in his 2025 book A Richer Retirement. More above.

Does Dave Ramsey get paid by the professionals he recommends?

Yes, by his company’s own disclosures. SmartVestor advisors pay Ramsey Solutions monthly fees, and independent reviews report that RamseyTrusted real estate agents pay a share of their commissions. Details and sources above.

Is Ramsey wrong about everything?

No. His debt-payoff advice works for a lot of people, a paid-off home is a fine goal, and he’s right to warn about scams and costs. His blind spot is the homeowner who no longer has time to follow his plan.

Every source on this page, with links and dates

Ramsey’s own pages (as they read on October 6, 2026)

Federal rules

Data

Researchers and critics

Referral disclosures and court records

Also cited without a link: Sacks and Sacks (2012), Salter, Pfeiffer and Evensky (2012), Pfeiffer, Salter and Evensky (2013), and Pfeiffer, Schaal and Salter (2014), all in the Journal of Financial Planning; Gal and McShane (2012), Journal of Marketing Research; HUD Mortgagee Letter 2017-12; HUD Handbook 4000.1; Bill Bengen, A Richer Retirement (2025); the Consumer Financial Protection Bureau’s August 2017 issue brief on reverse mortgages and Social Security; and the National Consumer Law Center’s 2023 report on reverse mortgage foreclosures.

Ideal Financial, Inc. is not affiliated with, endorsed by, or sponsored by Dave Ramsey, Ramsey Solutions or The Lampo Group. “Dave Ramsey,” “Ramsey Solutions,” “The Ramsey Show,” “RamseyTrusted” and “SmartVestor” are trademarks of their respective owners, used here only to identify the source of the statements discussed. Quotations are reproduced as published on the dates shown, for commentary and criticism. The researchers and professionals quoted here do not endorse Ideal Financial or me. The verdicts are my opinions based on the cited rules and research. Court matters are described as alleged in court filings and news reports; no court has ruled on the merits. This page is general information, not legal, tax or investment advice. Last checked against its sources October 6, 2026.

Written by Kenneth M. Adler

Broker & Owner, Ideal Financial, Inc. · 30 years in California lending · NMLS #240317 · CA DRE #01216608

Last reviewed October 6, 2026

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